Retail hardest hit by last winter's road closure

By Nic Wackerly

For the Trail-Gazette

Posted:
09/13/2017 10:19:00 AM MDT

U.S. 34 will close again for an extended period of time starting on Oct. 2 to continue repairs for damage from the 2013 floods.

Last year's road closure from Oct. 17 to May 25 had an impact on local business. From November 2016 to May 2017, the retail category generated 7.3 percent less general fund sales tax when compared to that same period of time a year prior.

Estes Ark, a local retail store, was impacted heavily by the U.S. 34 closure. The business is located on Lone Pine Drive, directly off of U.S. 34.

"The day they closed the U.S. 34 last October it was like hitting a wall," Penny LaBore said, an owner of the Estes Ark. "We were 50 to 75 percent down ... both in traffic and revenue."

From January 2017 to the end of May, the retail section was down $787,566 in taxable sales, when compared to the same period of time in 2016. However, it is not possible to determine a direct correlation between the decrease in sales tax or taxable sales for the retail sector with the closure of the 34.

"We can't tell if it is because of the closures, because of weather, because of whatever, there is no way to nail that down," Duane Hudson said, finance director for the Town of Estes Park. "I can not draw a direct correlation, ... there is some relationship, but does weather have more of an impact day-by-day, who knows?"

Businesses were impacted by the closure through a loss a workforce. The difficulty of reaching Estes Park was too much for some workers.

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"In my experience, one of the biggest impacts was workforce related," Estes Valley Partners for Commerce (EVPC) Board President Kirby Hazelton said. "Businesses lost staffing right off the bat when the closure was announced and it was hard to keep staff that was commuting from the 34 side."

Other sections of the economy in Estes Park did not have the same experience with the closure. The Town experienced an overall 8.3 percent increase in general fund sales tax collections from November 2016 to May 2017, when compared to the same time period a year prior. Part of the increase was a 26.9 percent growth from the lodging general fund sales tax. From January 2017 to the end of May, lodging experienced a $851,941 growth compared to that time period in 2016.

Overall, lodging does better year over year during the winter season. This is where the most room for growth is, according to Estes Area Lodging Association Board Member Paula Scheil.

For parts of the lodging community, the closure did not have much of an impact because events had been scheduled in advance.

"[The 34 closure] wasn't as huge simply because a lot of last year was pre-set events," Leah Pickering said, a representative of Marys Lake Lodge. "People attending these events were coming up regardless of the closure."

Lodging has the ability to change its rates, so during the holidays and weekends, due to an increase in visitation to the Estes Park area, the lodging segment increases rates. This is why the lodging tax trends higher than other segments, according to Scheil.

In addition to a growth in revenue generated from lodging, Estes Park experienced an increase in sales tax revenue from utilities. It grew 2.65 percent over the course of the closure. Part of this growth is from increased electricity rates that were implemented in September 2016 and in January.

Even with the overall growth in sales tax revenue, new business owners in Estes Park are conscientious of the possible effect of the next closure.

"For me it is the cards that are dealt," Harriette Woodard said, owner of Glow, a face and blow dry bar. "I'm not changing the way I am doing things, but I would be silly not to be concerned."

The Town of Estes Park was not sure how the first closure would impact business.

"[The impact] from the town standpoint was fairly minor, sales tax was strong for the winter, we actually expected it to be a lot worse, I think the weather had more to do with the variation than the closure," Frank Lancaster said, town administrator for the Town of Estes Park.

Elizabeth Fogarty, CEO of Visit Estes Park the town's Local Marketing District, said that the closure created some challenges for the community, but that the data was positive.

"When we look at the data we are very positive about the way the community rallied and worked with us on our marketing campaign as well," Fogarty said.

Fogarty said VEP ran a marketing campaign to promote taking U.S. 36 or Highway 7 during the closure period. She said the increase sales tax numbers indicated the overall economy was more successful during the closure than they had expected.

When looking at specific segments of the economy Fogarty said even retail, which was down during the closure period did better than national averages, which have also shown declines in the retail sector. However, Fogarty said VEP is doing marketing specifically promoting the uniqueness of Estes Park retail and has launched a "Made in Estes" page on the VEP website. She could not say how much of their marketing campaign focused on each individual sector, as much of the campaign involved marketing Estes Park as a whole.

VEP chose to include the month of October 2016 in their analysis of the closure, regarding sales tax revenue. October saw an 18.36 percent growth in the retail sector, when compared to October 2015. The Trail-Gazette chose not to include October because the road closure did not start until Oct. 17.

"We continue to pitch not just retail, but all the segments," Fogarty said. "We're marketing the destination as a whole. So, that conversation looks like the following -- come to Estes Park, plan ahead and choose your most desired lodging and while you're here make sure you have your shopping wish lists with you."

Fogarty said VEP also monitored traditional media and social media to see how visitors were responding to the closure. She said that while there were some complaints they were primarily from Estes Park residents, not visitors.

"I think some of the businesses on the 34 side suffered more," Lancaster said. "One of the things we have talked about and we want to talk about with the town is what can we do with signage or something to encourage people to explore that part of town."

LaBore believes that additional signage could help, but it would need to be specific.

"I think it would help if they were more specific about what businesses are down there," LaBore said. "Unless there is something more specific about what is open, it might not help."

To counter the possible negative impact of the next closure, local businesses are exploring cross-promotional opportunities to encourage visitors to come to Estes Park and stay longer.

"We want to get people coming up here for some things that you would expect in bigger cities and to stay longer," Woodard said. "We are working in conjunction with other businesses to provide competitive services to make others more likely to choose Estes Park as a destination."

Estes Park has experience dealing with the closure and will be better prepared for the next one starting in October.

"I think it is going to be painful for another closure, but the general consensus from the business community is that is needs to be done," Hazelton said. "Our goal at EVPC is to rally businesses together and to be assertive in making it through the closure together."

It is unclear how much the closure of Highway 34 influenced the visitation to Estes Park. Highway usage data from the Colorado Department of Transportation (CDOT) shows an increase in the combined traffic volume from the 34 and 36 to Estes Park during the period of the closure. The counter for U.S. 34 is north of Mall Road, according to CDOT, so it is unclear how precise the information is for traffic volume.

There is not a precise way to measure visitation to Estes Park, however, during the period of the closure, visitor numbers for Rocky Mountain National Park dropped during four of the eight months. May 2017, which saw three feet of snow in Estes Park in addition to the highway closure, experienced a 7.9 percent drop in total visitation from May of 2016. February 2017 suffered a 6 percent drop, January 2017 experienced a 17 percent drop and December 2016 had a 2.1 percent drop, all compared to data from the previous year. There was only one drop in attendance, when compared to the same month of the previous year, during the same eight month time period of the closure for the two years prior.

On Oct. 2, U.S. 34 will close again from just east of mile marker 66 to mile marker 83. It will reopen, weather permitting, prior to May 28, 2018.

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